LEGAL FORMATION OF COMMERCIAL COMPANIES
Forming a commercial company in Bolivia requires compliance with a series of procedures and legal steps. Once completed in accordance with the Commercial Code and current regulations, these steps grant legal personality and validate the actions of the company. However, there are situations where individuals attempt to operate as a company without completing the formalities or fail to meet the legal requirements. In such cases, the Bolivian Commercial Code classifies these entities as irregular companies (sociedades irregulares) and de facto companies (sociedades de hecho).
LEGAL STATUS AND EXISTENCE
JUDICIAL VERIFICATION AND DISSOLUTION
Judicial verification of the existence of an irregular or de facto company can be requested. However, if no registration in the Commercial Registry is proven, the judge will order the liquidation of the company and appoint liquidators, in accordance with Article 136 of the Bolivian Commercial Code.
LIABILITY OF REPRESENTATIVES AND OPERATORS
A critical legal aspect concerns liability for actions carried out in the name of an irregular or de facto company. The Commercial Code stipulates that “those who conduct operations on behalf of an irregular or de facto company, and those who act as its legal representatives, are jointly and fully liable for the obligations incurred with third parties.” This responsibility extends to managers and administrators of such companies.
LEGAL ACTIONS AND RIGHTS OF INNOCENT PARTNERS
As noted by Morales Guillén in his book Código de Comercio Concordado y Anotado, the action to verify the existence of an irregular company may be initiated not only by third parties but also by non-liable partners. These partners can later seek fulfillment of obligations and claim compensation for damages caused by the irregular status.
If you need legal advice regarding irregular or de facto companies in Bolivia, contact one of our expert attorneys. We are here to assist you.
Frequently Asked Questions (FAQs)
What is an irregular or de facto company in Bolivian law?
It is a business organization that operates without completing the formal legal requirements for incorporation. Although it lacks legal personality, it can still be held accountable for its obligations to third parties.
Can an irregular company be legalized or formalized later?
Yes, but it requires registration with the Commercial Registry and compliance with all applicable legal formalities. Until then, its actions carry personal liability for its operators.
Who is liable for the actions of a de facto company?
All individuals who act in the name of the company or represent it legally are jointly and fully liable for any obligations incurred in dealings with third parties.
The content of this article does not reflect the technical opinion of Rigoberto Paredes & Associates and should not be considered a substitute for legal advice. The information presented herein corresponds to the date of publication and may be outdated at the time of reading. Rigoberto Paredes & Associates assumes no responsibility for keeping the information in this article up to date, as legal regulations may change over time.
